The purpose and nature of business Flashcards
The reasons for starting a business
To produce a good
To produce a service
To distribute products
To benefit society
To fill a gap in the market
To fulfil a business opportunity
Difference between goods and services
Goods are tangible eg food and clothes
Services are intangible eg hairdressing and train journeys
Difference between wants and needs
Wants are things people would like but can survive without eg holidays and cars
Needs are things required in order to survive eg clothing and water
What are the factors of production
Land - the physical land and site where the business is located
Labour - includes skills and number of employees needed
Capital - machinery and equipment needed and the skills to make the products or provide the service
Enterprise - the entrepreneur who takes a risk and creates a business using the other three factors of production
What is opportunity cost
something that is given up in order to do something else
Sectors of a business
Primary - produce or extract materials eg farming fishing and mining
Secondary - makes or manufactures goods taking raw materials from PS and turn them into finished goods
Tertiary - final stage in production which provides services eg estate agents and hair dressers
What is an entrepreneur
An individual who takes a risk to start a business
Characteristics of an entrepreneur
Hardworking - need to carry out tasks and work long hours
Organised - need to keep on top of day to day tasks and plan for the future, arrange finances and meet deadlines
Innovative - keep coming up with ideas to please customers
Willing to take a risk - need to be willing to risk money, time and possibly give up old job
Objectives of an entrepreneur
-to be your own boss
-flexible working hours
-follow an interest or hobby
-increase income
-fill a gap in the market
-escape job or unhappy
-fulfil ethical or social goal
What can objectives be split into
Financial - money, making profit, certain amount of sales
Non financial - personal satisfaction, challenge, independence
What does dynamic nature of a business mean?
When a business constantly adapts to respond to consumer needs and wangs
What are the different changes dynamically of a business?
Technological change
Economic change
Legal change
Environmental expectations
Technological change
need to keep up with rapid changes in tech eg advertising methods, production and e commerce
Economic change
economic factors have a big impact eg interest rates, inflation, and GDP
Legal change
will be affected by new governemnt laws eg minimum wage increase
